Michael Bellisario: And that is from the way back machine. My second question, just on the expense side, probably for Aaron. Just can you walk through some of the margin headwinds that you saw in the third quarter and then what’s embedded in your fourth quarter guidance on the margin front?
Aaron Reyes: So again, I think the one that’s the most obvious that we’ve been well publicized is property insurance. So, as we think about the renewal that we did, was on effectively July 1. So, Q3 was the first quarter of the new run rate. And that accounts for about 60 basis points, of margin headwind. And then on top of that, we had an incremental 30 basis points margin headwind just from the situation, in Wailea and the kind of change in the mix of business that we had there. And kind of elsewhere across the portfolio, we’ve seen some moderation in wage rates, and call it in that kind of 4% to 5% area. And then a bit of relief, in utilities and a couple other operating expenses. But the primary one is it would property insurance renewal.
Operator: Your next question comes from the line of Chris Woronka with Deutsche Bank. Please go ahead.
Chris Woronka: Good morning, guys. So, with the announcement on Renaissance Long Beach going to Marriott, you guys, I think we’ll have one Renaissance left, right, down in Orlando. I know you’ve sold or converted a bunch. So, I guess the next logical question is there a kind of a next-up plan for the Orlando Renaissance?
Bryan Giglia: When trying to pick what brand is best for any asset, sometimes the brands just not available. And so, it’s already in the market, there’s area protections, there’s saturation. And so that always comes into play and there is if you look at the Orlando market, there’s a lot of everything there. So that would be the first hurdle. When looking at the Renaissance brand, and what we found because we have been a large owner of Renaissance over time is that, it’s kind of a bifurcated result. And what I mean by that is from a group perspective, if you have a great group box and you have good meeting space and good amenities and high service levels, it can really perform well. The Renaissance Washington DC from a group perspective did a fantastic job.
It held its own and it kept market share and perform really well. Where it didn’t do as well was on the transient side because while a group customer can come and understand the product and walk it and see what their clients are going to get. The transient customer doesn’t have that ability and so they go with what they’re familiar with or what they have experienced within the Westin brand from a transient standpoint is just much better. Marriott brand is a stronger, better identifiable brand. So, in Orlando, we have fantastic meeting space. We have the ability to give the group more space per group room than they would typically get in another hotel. We also while it’s almost 800 room hotel, it’s smaller when you look at the size hotels that you can find in Orlando.
And so, a group can have run of house. And they can control, they’re not group number two or three in-house, they can be the main group. And so, reasons like that Orlando has done really well. From a leisure standpoint in Orlando, it’s always going to fall behind the parks. It’s going it’s a sort of a convenient in between location between Universal and Disney, but it’s in between Universal and Disney too. And so, from that standpoint, I think Orlando can continue to do very well as is. Now there may be some things longer term that we can new to make it a little bit more appealing to the leisure side, given that market. But as far as what we’ve done with some of the other hotels. Does that mean we have to do something with Orlando? No, Orlando can do just fine, and really do well as a Renaissance as it has done.
Operator: Your next question comes from the line of Anthony Powell with Barclays. Please go ahead.
Anthony Powell: Good morning. I guess a question on Maui. It seems like trends before the wildfires were actually pretty good, especially relative to some of the other leisure markets. Where do you see Maui in terms of this normalization? Can we talked about across leisure? Is there more to come there? Do you think Maui may be able to avoid some of that normalization, once you kind of factor out the impact of the wildfires?
Bryan Giglia: So, Maui had done really well last year into this year and didn’t see the initial wave of leisure normalization, as some of the other coastal markets did. Our expectation for Q3 prior to the fire was that we were going to start to see that in Maui. And that we would see some leisure pullback. And we were starting to see that in the beginning of the quarter. And then we at that point right prior to the fire we started seeing transient reservations pick up. And so, we were encouraged that Maui was going to whether that storm pretty well. And then unfortunately, the fire happened and that changed the dynamic of the entire market and changed Wailea for a period of time where it’s just that mix of business was completely different.
And the hotel did a fantastic job of taking care of all the associates at the hotel and then taking care of the guests which were not their typical guests, they were guests that were either displaced or going to help during the day. And so, while the hotel was running at a decent occupancy there was really no one around during the day and that’s not really how that hotel works. And so, one we’ve been very pleasantly surprised at how quickly the market and the Wailea market has reverted back to its normal business. And as we go forward and we look into Q4, there is some, on the shoulder periods and going into through October and into November. It’s a little leisure softer than what it was, but we are really encouraged by what we’re seeing with during the festive weeks.
So, once you get into the holiday season, we’re actually trending ahead of last year. And like we saw before the fires, back in July and then to the beginning of August, we’re starting to see that transient pick up again, going into the fourth quarter and into next year. So, the answer is there’s been a lot of change happening in Maui over the last few months. So, we’re going to need to see how things normalize. But from what we’ve seen so far, it’s more encouraging than maybe some of the other leisure markets. But to your initial question, it’s not immune from it. But it is seems to have fared better and what we’re seeing right now is definitely encouraging.
Operator: Your final question comes from the line of Floris Van Dijkum with Compass Point. Please go ahead.
Floris Van Dijkum: Thanks for taking my question. Brian, maybe just to follow-up on Smedes question in terms of reinvesting some of the proceeds. You talked a little bit about some of the things you’re considering. Obviously, one of the other things to think about is, have you considered as opposed to buying one asset, splitting that up into two assets or reducing the capital need. Are there tax implications with that? Or can you still 1031 and if you split it among a couple of assets?
Bryan Giglia: You can you can definitely exchange in morning for us. You can definitely exchange into multiple assets. And that’s something that we are absolutely looking at, because additional diversity in the portfolio would be a plus. So that’s something we’re absolutely evaluating. Again, I think based on what we’re seeing now, it looks like it is skewed more towards the urban group type hotels. And again, it doesn’t have to be all or it doesn’t have to be and it will not be all or nothing. It can be a partial 1031 exchange and then we might wait for a bit if we’re not finding the deal. Remember, we understand that it’s important to, if we’re trying to deploy capital into an asset right now, it has to be a good deal. And we are out there trying to identify and using the leverage we have to find a good deal.
